Presumption Under Section 139 Doesn’t Arise Automatically If Notice Under Section 138(b) Is Improperly Addressed: Madras High Court Upholds Acquittal in Cheque Dishonour Case

“Where statutory notice is incorrectly addressed and consequently not served, the presumption under Section 139 of the N.I. Act cannot be invoked against the accused,” held the Madras High Court, reiterating the necessity of strict compliance with Section 138(b) of the Negotiable Instruments Act.

Madras High Court delivered a significant ruling concerning the validity of statutory notice under Section 138 of the Negotiable Instruments Act, 1881, and the presumption under Section 139. The Court upheld the acquittal of the accused, affirming that incorrectly addressed statutory notice defeats the presumption and vitiates prosecution under Section 138.

The case originated from a private complaint filed by the appellant, V. Babu, before the Chief Judicial Magistrate, Erode, alleging that the respondent, P. Thiyagarajan, had borrowed ₹2,00,000 on 25 February 2007 and issued a cheque dated 30 March 2007 drawn on IndusInd Bank, Erode Branch. The cheque was dishonoured on 3 April 2007 due to "Funds Insufficient". A statutory notice under Section 138(b) was issued on 13 April 2007 but was returned as “not claimed” on 18 April 2007.

The trial court dismissed the complaint in C.C. No. 158 of 2011, finding that the statutory notice was not correctly addressed. The complainant filed the present criminal appeal against acquittal under Section 378(4) CrPC.

The central legal question was whether the mandatory statutory notice was validly served, and whether the presumption under Section 139 of the Negotiable Instruments Act could arise where the notice itself was defective.

Justice M. Nirmal Kumar, analyzing the materials, emphasized that statutory compliance with Section 138(b) was non-negotiable, and any error in the addressing of notice impacts its legal sanctity.

The statutory notice marked as Ex.P3, the postal receipt as Ex.P4, and the returned cover as Ex.P5 were critically examined. The Court observed that while the complainant argued the name “Thiyagarajan” was correctly written, Ex.P5 revealed overwriting, and the postal records evidenced that the notice was initially addressed to “Thangarajan”.

“Upon examining the postal cover, it is evident that there is some overwriting and correction in the name of Mr. P. Thiyagarajan… the endorsement of ‘no such person’ followed by ‘not claimed’ strengthens the respondent’s claim of non-service,” noted the Court.

Evidence and Testimony: Crucial to Discredit Presumption

The defence relied on oral and documentary evidence, including testimonies of:

• D.W.1 (Postman Krishnan), who stated he knew the respondent personally for 15 years and affirmed that the cover was addressed to ‘Thangarajan’, not ‘Thiyagarajan’, hence undelivered;

• D.W.2 (Postal Department PRO), who supported this with Ex.D2, the postal enquiry report, confirming the discrepancy in the addressee’s name;

• The respondent himself as D.W.3, who denied having received any such notice.

“The burden of proving service of notice lies on the complainant. Once credible evidence of non-service is adduced, the burden is not discharged merely by sending the notice,” observed the Court.

The Court found that the presumption under Section 27 of the General Clauses Act, 1897 was rebutted due to clear evidence of incorrect addressing. It also held that Section 139 of the N.I. Act, which presumes the cheque was issued in discharge of a debt or liability, cannot be triggered where the essential precondition of valid notice is unmet.

“Presumption under Section 139 does not arise automatically where statutory notice was not properly served,” declared the Bench.

Dismissing the appeal, the High Court observed that the Trial Court had rightly acquitted the respondent, based on a proper appreciation of both documentary and oral evidence.

“This Court finds no reason to interfere with the judgment of the Trial Court, which is a well-reasoned one,” concluded Justice M. Nirmal Kumar.

The Court also reaffirmed earlier decisions, including:

• Crl.A. No. 339 of 2010, Madras High Court (01.08.2024): where incorrect naming in notice led to a similar acquittal;

• Crl.A. No. 806 of 2009, Madras High Court: on strict compliance with Section 138(b).

In reaffirming the trial court’s decision, the Madras High Court has underlined a critical procedural safeguard in cheque bounce cases – accurate and provable service of statutory notice. The ruling makes it clear that the burden of proving proper service is squarely on the complainant, and any laxity or clerical error can nullify the entire prosecution under Section 138.

By holding that the presumption under Section 139 is contingent upon valid service of notice, the Court has fortified the procedural requirements under the N.I. Act and signaled strict judicial scrutiny in such cases.

Date of Decision: 22.10.2025